ABC Indicator Makes the Grade in Its Public Test

The ABC Indicator of movements in the S&P 500 (INDEXSP:.INX) introduced in a J.J.’s Risky Business blog post in December behaved well during its recent public test here. Over the course of the test, the indicator’s signals were correct on eight occasions, or 80.00 percent of the time, and incorrect on two occasions, or 20.00 percent of the time.

Accordingly, the overall results were in line with the ABC Indicator’s history, which before the launch of the now-completed test suggested they would be successful between six and eight times and unsuccessful between two and four times. Since assuming its current form on July 6, 2009, the indicator’s performance in forecasting the short-term direction of the U.S. large-capitalization index on a closing basis can be summarized as follows:

• Its signals have been correct on 99 occasions, or 69.72 percent of the time, and incorrect on 43 occasions, or 30.28 percent of the time.

• Its Buy signals have been right on 57 occasions, or 80.28 percent of the time, and wrong on 14 occasions, or 19.72 percent of the time.

• Its Sell signals have been right on 42 occasions, or 59.15 percent of the time, and wrong on 29 occasions, or 40.85 percent of the time.

During the ABC Indicator’s recent public test at J.J.’s Risky Business, it produced as follows:

• In the case of the Buy signal on Dec. 20, the S&P 500 on a closing basis rose to as high as 1,848.36 on Dec. 31 from 1,809.60 on Dec. 19. Successful.

• In the case of the Sell signal on Jan. 3, the index on a closing basis fell to as low as 1,826.77 on Jan. 6 from 1,831.98 on Jan. 2. Successful.

• In the case of the Buy signal on Jan. 10, the S&P 500 on a closing basis rose to as high as 1,842.37 on Jan. 10 from 1,838.13 on Jan. 9. Successful.

• In the case of the Sell signal on Jan. 14, the index on a closing basis rose to 1,838.88 that day from 1,819.20 on Jan. 13. Unsuccessful.

• In the case of the Buy signal on Jan. 15, the S&P 500 on a closing basis rose to as high as 1,848.38 that day from 1,838.88 on Jan. 14. Successful.

• In the case of the Sell signal on Jan. 24, the index on a closing basis fell to as low as 1,741.89 on Feb. 3 from 1,828.46 on Jan. 23. Successful.

• In the case of the Buy signal on Feb. 11, the S&P 500 on a closing basis rose to as high as 1,859.45 on Feb. 28 from 1,799.84 on Feb. 10. Successful.

• In the case of the Sell signal on March 4, the index on a closing basis rose to 1,873.91 that day from 1,845.73 on March 3. Unsuccessful.

• In the case of the Buy signal on March 5, the S&P 500 on a closing basis rose to as high as 1,878.04 on March 7 from 1,873.91 on March 4. Successful.

• In the case of the Sell signal on March 14, the index on a closing basis fell to as low as 1,841.13 that day from 1,846.34 on March 13. Successful.

Source: This chart is based on J.J.’s Risky Business proprietary data.

Related Reading

The ABC Indicator of Movements in the S&P 500

ABC Indicator Flashes S&P 500 ‘Sell’ Signal: Jan. 3

ABC Indicator Flashes S&P 500 ‘Buy’ Signal: Jan. 10

ABC Indicator Flashes S&P 500 ‘Sell’ Signal: Jan. 14

ABC Indicator Flashes S&P 500 ‘Buy’ Signal: Jan. 15

ABC Indicator Flashes S&P 500 ‘Sell’ Signal: Jan. 24

ABC Indicator Flashes S&P 500 ‘Buy’ Signal: Feb. 11

ABC Indicator Flashes S&P 500 ‘Sell’ Signal: March 4

ABC Indicator Flashes S&P 500 ‘Buy’ Signal: March 5

ABC Indicator Flashes S&P 500 ‘Sell’ Signal: March 14

Disclaimer: The opinions expressed herein by the author do not constitute an investment recommendation, and they are unsuitable for employment in the making of investment decisions. The opinions expressed herein address only certain aspects of potential investment in any securities and cannot substitute for comprehensive investment analysis. The opinions expressed herein are based on an incomplete set of information, illustrative in nature, and limited in scope. In addition, the opinions expressed herein reflect the author’s best judgment as of the date of publication, and they are subject to change without notice.

ABC Indicator Flashes S&P 500 ‘Sell’ Signal: March 14

The ABC Indicator of movements in the S&P 500 (INDEXSP:.INX) introduced in a J.J.’s Risky Business blog post in December is flashing a Sell signal this Friday morning. This is the 10th and last signal delivered during the current public test of the indicator here.

Over the course of this ABC Indicator test, its signals have been correct on seven occasions, or 77.78 percent of the time, and incorrect on two occasions, or 22.22 percent of the time. Thus, the overall results will be in line with the indicator’s history, which before the launch of the test suggested they would be successful between six and eight times and unsuccessful between two and four times.

Since assuming its current form on July 6, 2009, the ABC Indicator’s behavior in forecasting the short-term direction of the U.S. large-capitalization index on a closing basis has produced the following track record:

• Its signals have been correct on 98 occasions, or 69.50 percent of the time, and incorrect on 43 occasions, or 30.50 percent of the time.

• Its Buy signals have been right on 57 occasions, or 80.28 percent of the time, and wrong on 14 occasions, or 19.72 percent of the time.

• Its Sell signals have been right on 41 occasions, or 58.57 percent of the time, and wrong on 29 occasions, or 41.43 percent of the time.

And since the beginning of its current public test at J.J.’s Risky Business, the ABC Indicator has performed as follows:

• In the case of the Buy signal on Dec. 20, the S&P 500 on a closing basis rose to as high as 1,848.36 on Dec. 31 from 1,809.60 on Dec. 19. Successful.

• In the case of the Sell signal on Jan. 3, the index on a closing basis fell to as low as 1,826.77 on Jan. 6 from 1,831.98 on Jan. 2. Successful.

• In the case of the Buy signal on Jan. 10, the S&P 500 on a closing basis rose to as high as 1,842.37 on Jan. 10 from 1,838.13 on Jan. 9. Successful.

• In the case of the Sell signal on Jan. 14, the index on a closing basis rose to 1,838.88 that day from 1,819.20 on Jan. 13. Unsuccessful.

• In the case of the Buy signal on Jan. 15, the S&P 500 on a closing basis rose to as high as 1,848.38 that day from 1,838.88 on Jan. 14. Successful.

• In the case of the Sell signal on Jan. 24, the index on a closing basis fell to as low as 1,741.89 on Feb. 3 from 1,828.46 on Jan. 23. Successful.

• In the case of the Buy signal on Feb. 11, the S&P 500 on a closing basis rose to as high as 1,859.45 on Feb. 28 from 1,799.84 on Feb. 10. Successful.

• In the case of the Sell signal on March 4, the index on a closing basis rose to 1,873.91 that day from 1,845.73 on March 3. Unsuccessful.

• In the case of the Buy signal on March 5, the S&P 500 on a closing basis rose to as high as 1,878.04 on March 7 from 1,873.91 on March 4. Successful.

Source: This chart is based on J.J.’s Risky Business proprietary data.

Related Reading

The ABC Indicator of Movements in the S&P 500

ABC Indicator Flashes S&P 500 ‘Sell’ Signal: Jan. 3

ABC Indicator Flashes S&P 500 ‘Buy’ Signal: Jan. 10

ABC Indicator Flashes S&P 500 ‘Sell’ Signal: Jan. 14

ABC Indicator Flashes S&P 500 ‘Buy’ Signal: Jan. 15

ABC Indicator Flashes S&P 500 ‘Sell’ Signal: Jan. 24

ABC Indicator Flashes S&P 500 ‘Buy’ Signal: Feb. 11

ABC Indicator Flashes S&P 500 ‘Sell’ Signal: March 4

ABC Indicator Flashes S&P 500 ‘Buy’ Signal: March 5

Disclaimer: The opinions expressed herein by the author do not constitute an investment recommendation, and they are unsuitable for employment in the making of investment decisions. The opinions expressed herein address only certain aspects of potential investment in any securities and cannot substitute for comprehensive investment analysis. The opinions expressed herein are based on an incomplete set of information, illustrative in nature, and limited in scope. In addition, the opinions expressed herein reflect the author’s best judgment as of the date of publication, and they are subject to change without notice.

ABC Indicator Flashes S&P 500 ‘Buy’ Signal: March 5

The ABC Indicator of movements in the S&P 500 (INDEXSP:.INX) introduced in a J.J.’s Risky Business blog post in December is flashing a Buy signal this Wednesday morning. As was the case with the unsuccessful Sell signal’s strength yesterday, the signal’s strength today again carries with it no suggestion as to whether the equity market will continue to be whipsawed in the midst of the geopolitical situation involving Russia and Ukraine.

Nonetheless, I am happy to note the following data points related to the ABC Indicator’s behavior in forecasting the short-term direction of the U.S. large-capitalization index on a closing basis since July 6, 2009:

• Its signals have been correct on 97 occasions, or 69.29 percent of the time, and incorrect on 43 occasions, or 30.71 percent of the time.

• Its Buy signals have been right on 56 occasions, or 80.00 percent of the time, and wrong on 14 occasions, or 20.00 percent of the time.

• Its Sell signals have been right on 41 occasions, or 58.57 percent of the time, and wrong on 29 occasions, or 41.43 percent of the time.
And I am pleased to point out the ABC Indicator has performed well during its current public test at J.J.’s Risky Business. To date, its signals over the course of the test have been successful on six occasions, or 75.00 percent of the time, and unsuccessful on two occasions, or 25.00 percent of the time. The test will encompass 10 signals, and history suggests they will be correct between six and eight times and incorrect between two and four times.

The first eight ABC Indicator signals mentioned in the blog posts linked below produced as follows:

• In the case of the Buy signal on Dec. 20, the S&P 500 on a closing basis rose to as high as 1,848.36 on Dec. 31 from 1,809.60 on Dec. 19. Successful.

• In the case of the Sell signal on Jan. 3, the index on a closing basis fell to as low as 1,826.77 on Jan. 6 from 1,831.98 on Jan. 2. Successful.

• In the case of the Buy signal on Jan. 10, the S&P 500 on a closing basis rose to as high as 1,842.37 on Jan. 10 from 1,838.13 on Jan. 9. Successful.

• In the case of the Sell signal on Jan. 14, the index on a closing basis rose to 1,838.88 that day from 1,819.20 on Jan. 13. Unsuccessful.

• In the case of the Buy signal on Jan. 15, the S&P 500 on a closing basis rose to as high as 1,848.38 that day from 1,838.88 on Jan. 14. Successful.

• In the case of the Sell signal on Jan. 24, the index on a closing basis fell to as low as 1,741.89 on Feb. 3 from 1,828.46 on Jan. 23. Successful.

• In the case of the Buy signal on Feb. 11, the S&P 500 on a closing basis rose to as high as 1,859.45 on Feb. 28 from 1,799.84 on Feb. 10. Successful.

• In the case of the Sell signal on March 4, the index on a closing basis rose to 1,873.91 that day from 1,845.73 on March 3. Unsuccessful.



Source: This chart is based on J.J.’s Risky Business proprietary data.

Related Reading

The ABC Indicator of Movements in the S&P 500

ABC Indicator Flashes S&P 500 ‘Sell’ Signal: Jan. 3

ABC Indicator Flashes S&P 500 ‘Buy’ Signal: Jan. 10

ABC Indicator Flashes S&P 500 ‘Sell’ Signal: Jan. 14

ABC Indicator Flashes S&P 500 ‘Buy’ Signal: Jan. 15

ABC Indicator Flashes S&P 500 ‘Sell’ Signal: Jan. 24

ABC Indicator Flashes S&P 500 ‘Buy’ Signal: Feb. 11

ABC Indicator Flashes S&P 500 ‘Sell’ Signal: March 4 

Disclaimer: The opinions expressed herein by the author do not constitute an investment recommendation, and they are unsuitable for employment in the making of investment decisions. The opinions expressed herein address only certain aspects of potential investment in any securities and cannot substitute for comprehensive investment analysis. The opinions expressed herein are based on an incomplete set of information, illustrative in nature, and limited in scope. In addition, the opinions expressed herein reflect the author’s best judgment as of the date of publication, and they are subject to change without notice.

ABC Indicator Flashes S&P 500 ‘Sell’ Signal: March 4

The ABC Indicator of movements in the S&P 500 (INDEXSP:.INX) introduced in a J.J.’s Risky Business blog post in December is flashing a Sell signal this Tuesday morning. However, the signal’s strength carries with it no suggestion as to whether the equity market is about to be whipsawed in the midst of the geopolitical situation involving Russia and Ukraine.

I am happy to note the following data points related to the ABC Indicator’s record in forecasting the short-term direction of the U.S. large-capitalization index on a closing basis since July 6, 2009:

• Its signals have been correct on 97 occasions, or 69.78 percent of the time, and incorrect on 42 occasions, or 30.22 percent of the time.
• Its Buy signals have been right on 56 occasions, or 80.00 percent of the time, and wrong on 14 occasions, or 20.00 percent of the time.
• Its Sell signals have been right on 41 occasions, or 59.42 percent of the time, and wrong on 28 occasions, or 40.58 percent of the time.

I am also pleased to point out the ABC Indicator has done even better during its current public test at J.J.’s Risky Business. To date, its signals over the course of the test have been successful on six occasions, or 85.71 percent of the time, and unsuccessful on one occasion, or 14.29 percent of the time. The test will encompass 10 signals, and history suggests they will be correct between six and eight times and incorrect between two and four times.

The first seven ABC Indicator signals mentioned in the blog posts linked below produced as follows:

• In the case of the Buy signal on Dec. 20, the S&P 500 on a closing basis rose to as high as 1,848.36 on Dec. 31 from 1,809.60 on Dec. 19. Successful.
• In the case of the Sell signal on Jan. 3, the index on a closing basis fell to as low as 1,826.77 on Jan. 6 from 1,831.98 on Jan. 2. Successful.
• In the case of the Buy signal on Jan. 10, the S&P 500 on a closing basis rose to as high as 1,842.37 on Jan. 10 from 1,838.13 on Jan. 9. Successful.
• In the case of the Sell signal on Jan. 14, the index on a closing basis rose to 1,838.88 that day from 1,819.20 on Jan. 13. Unsuccessful.
• In the case of the Buy signal on Jan. 15, the S&P 500 on a closing basis rose to as high as 1,848.38 that day from 1,838.88 on Jan. 14. Successful.
• In the case of the Sell signal on Jan. 24, the index on a closing basis fell to as low as 1,741.89 on Feb. 3 from 1,828.46 on Jan. 23. Successful.
• In the case of the Buy signal on Feb. 11, the S&P 500 on a closing basis rose to as high as 1,859.45 on Feb. 28 from 1,799.84 on Feb. 10. Successful.

Source: This chart is based on J.J.’s Risky Business proprietary data.

Related Reading

The ABC Indicator of Movements in the S&P 500

ABC Indicator Flashes S&P 500 ‘Sell’ Signal: Jan. 3

ABC Indicator Flashes S&P 500 ‘Buy’ Signal: Jan. 10

ABC Indicator Flashes S&P 500 ‘Sell’ Signal: Jan. 14

ABC Indicator Flashes S&P 500 ‘Buy’ Signal: Jan. 15

ABC Indicator Flashes S&P 500 ‘Sell’ Signal: Jan. 24

ABC Indicator Flashes S&P 500 ‘Buy’ Signal: Feb. 11

Disclaimer: The opinions expressed herein by the author do not constitute an investment recommendation, and they are unsuitable for employment in the making of investment decisions. The opinions expressed herein address only certain aspects of potential investment in any securities and cannot substitute for comprehensive investment analysis. The opinions expressed herein are based on an incomplete set of information, illustrative in nature, and limited in scope. In addition, the opinions expressed herein reflect the author’s best judgment as of the date of publication, and they are subject to change without notice.

ABC Indicator Flashes S&P 500 ‘Buy’ Signal: Feb. 11

The ABC Indicator of movements in the S&P 500 (INDEXSP:.INX) introduced in a J.J.’s Risky Business blog post in December is flashing a Buy signal this Tuesday morning. Meanwhile, I have good news and bad news about its record in forecasting the short-term direction of the U.S. large-capitalization index on a closing basis.

Here’s the good news: I am happy to note the latest ABC Indicator signal succeeded in its task during the current public test of the pointer at J.J.’s Risky Business: The Sell signal on Jan. 24 was followed by the S&P 500 falling to as low as 1,741.89 on Feb. 3 from 1,828.46 on Jan. 23. The test will encompass 10 signals, and history suggests they will be correct between six and eight times and incorrect between two and four times. To this point in the test, they have been right five times and wrong one time.

The first five ABC Indicator signals mentioned in the blog posts linked below produced as follows:

• In the case of the Buy signal on Dec. 20, the S&P 500 on a closing basis rose to as high as 1,848.36 on Dec. 31 from 1,809.60 on Dec. 19. Successful.

• In the case of the Sell signal on Jan. 3, the index on a closing basis fell to as low as 1,826.77 on Jan. 6 from 1,831.98 on Jan. 2. Successful.

• In the case of the Buy signal on Jan. 10, the index on a closing basis rose to as high as 1,842.37 on Jan. 10 from 1,838.13 on Jan. 9. Successful.

• In the case of the Sell signal on Jan. 14, the index on a closing basis rose to 1,838.88 that day from 1,819.20 on Jan. 13. Unsuccessful.

• In the case of the Buy signal on Jan. 15, the index on a closing basis rose to as high as 1,848.38 that day from 1,838.88 on Jan. 14. Successful.

Here’s the bad news: I am unhappy to note that in forecasting the short-term direction of the S&P 500 on a closing basis since July 6, 2009, the ABC Indicator’s signals have been correct on 96 occasions, or 69.57 percent of the time, and incorrect on 42 occasions, or 30.43 percent of the time.

Meanwhile, the indicator’s Buy signals have been right on 55 occasions, or 79.71 percent of the time, and wrong on 14 occasions, or 20.29 percent of the time, while its Sell signals have been right on 41 occasions, or 59.42 percent of the time, and wrong on 28 occasions, or 40.58 percent of the time.

So why do these apparently excellent figures constitute bad news? They do so because they are inconsistent with the numbers reported in the blog posts linked below.

In recently conducting a historical research study of the ABC Indicator, I discovered three cases during a volatile period in September-October 2010 when I categorized its signals in my spreadsheet as being successful on a closing basis even though they were successful only on an intraday basis. I recall my thought process at that time as running along this line: “If I am making money by employing a given signal, then how can I classify it as unsuccessful?” It was a fair point. However, this blog series focuses not on the indicator’s behavior on an intraday basis but on its performance on a closing basis. Therefore, a Correction with the appropriate data will appear beneath each previously published post in the series.

Source: This chart is based on J.J.’s Risky Business proprietary data.

Related Reading

The ABC Indicator of Movements in the S&P 500

ABC Indicator Flashes S&P 500 ‘Sell’ Signal: Jan. 3

ABC Indicator Flashes S&P 500 ‘Buy’ Signal: Jan. 10

ABC Indicator Flashes S&P 500 ‘Sell’ Signal: Jan. 14

ABC Indicator Flashes S&P 500 ‘Buy’ Signal: Jan. 15

ABC Indicator Flashes S&P 500 ‘Sell’ Signal: Jan. 24

Disclaimer: The opinions expressed herein by the author do not constitute an investment recommendation, and they are unsuitable for employment in the making of investment decisions. The opinions expressed herein address only certain aspects of potential investment in any securities and cannot substitute for comprehensive investment analysis. The opinions expressed herein are based on an incomplete set of information, illustrative in nature, and limited in scope. In addition, the opinions expressed herein reflect the author’s best judgment as of the date of publication, and they are subject to change without notice.

ABC Indicator Flashes S&P 500 ‘Sell’ Signal: Jan. 24

The ABC Indicator of movements in the S&P 500 (INDEXSP:.INX) introduced in a J.J.’s Risky Business blog post last month is flashing a Sell signal this Friday morning. In forecasting the short-term direction of the U.S. large-capitalization index on a closing basis since July 6, 2009, this indicator’s signals have been correct on 98 occasions, or 71.53 percent of the time, and incorrect on 39 occasions, or 28.47 percent of the time.

There have been important differences between the behaviors of the ABC Indicator’s Buy and Sell signals during the above-referenced period, as mentioned in a blog post this month. Its Buy signals have been right on 56 occasions, or 81.16 percent of the time, and wrong on 13 occasions, or 18.84 percent of the time, while its Sell signals have been right on 42 occasions, or 61.76 percent of the time, and wrong on 26 occasions, or 38.24 percent of the time.

I am happy to note the latest ABC Indicator signal succeeded in its task of forecasting the short-term direction of the S&P 500 on a closing basis during the current public test of the pointer at J.J.’s Risky Business: The Buy signal on Jan. 15 was followed by the index rising to as high as 1,848.38 that day from 1,838.88 on Jan. 14. This test will encompass 10 signals, and history suggests they will be correct between six and eight times and incorrect between two and four times. To this point in the test, they have been right four times and wrong one time, which means the indicator is performing within its historical parameters.

The first four ABC Indicator signals mentioned in the blog posts linked below produced as follows:

• In the case of the Buy signal on Dec. 20, the S&P 500 on a closing basis rose to as high as 1,848.36 on Dec. 31 from 1,809.60 on Dec. 19. Successful.

• In the case of the Sell signal on Jan. 3, the index on a closing basis fell to as low as 1,826.77 on Jan. 6 from 1,831.98 on Jan. 2. Successful.

• In the case of the Buy signal on Jan. 10, the index on a closing basis rose to as high as 1,842.37 on Jan. 10 from 1,838.13 on Jan. 9. Successful.

• In the case of the Sell signal on Jan. 14, the index on a closing basis rose to 1,838.88  that day from 1,819.20 on Jan. 13. Unsuccessful.

Source: This chart is based on J.J.’s Risky Business proprietary data.

Related Reading

The ABC Indicator of Movements in the S&P 500

ABC Indicator Flashes S&P 500 ‘Sell’ Signal: Jan. 3

ABC Indicator Flashes S&P 500 ‘Buy’ Signal: Jan. 10

ABC Indicator Flashes S&P 500 ‘Sell’ Signal: Jan. 14

ABC Indicator Flashes S&P 500 ‘Buy’ Signal: Jan. 15

Disclaimer: The opinions expressed herein by the author do not constitute an investment recommendation, and they are unsuitable for employment in the making of investment decisions. The opinions expressed herein address only certain aspects of potential investment in any securities and cannot substitute for comprehensive investment analysis. The opinions expressed herein are based on an incomplete set of information, illustrative in nature, and limited in scope. In addition, the opinions expressed herein reflect the author’s best judgment as of the date of publication, and they are subject to change without notice.

ABC Indicator Flashes S&P 500 ‘Buy’ Signal: Jan. 15

The ABC Indicator of movements in the S&P 500 (INDEXSP:.INX) introduced in a J.J.’s Risky Business blog post last month is flashing a Buy signal this Wednesday morning. In forecasting the short-term direction of the U.S. large-capitalization index on a closing basis since July 6, 2009, this indicator’s signals have been correct on 97 occasions, or 71.32 percent of the time, and incorrect on 39 occasions, or 28.68 percent of the time.

There have been important differences between the behaviors of the ABC Indicator’s Buy and Sell signals during the above-referenced period, as mentioned in a blog post this month. Its Buy signals have been right on 55 occasions, or 80.88 percent of the time, and wrong on 13 occasions, or 19.12 percent of the time, while its Sell signals have been right on 42 occasions, or 61.76 percent of the time, and wrong on 26 occasions, or 38.24 percent of the time.

Meanwhile, I am unhappy (although neither shocked nor surprised) to note the first public test of the ABC Indicator in forecasting the short-term direction of the S&P 500 on a closing basis is posting its initial unsuccessful result at J.J.’s Risky Business, as the latest Sell signal failed in its mission, with the index rising to 1,838.88 on Tuesday from 1,819.20 on Monday. This test will encompass 10 signals, and history suggests they will be correct between six and eight times and incorrect between two and four times. To this point in the test, they have been right three times and wrong one time, which means the indicator is performing within its historical parameters.

The first three ABC Indicator signals mentioned in the blog posts linked below were successful, as follows:

• In the case of the Buy signal on Dec. 20, the S&P 500 on a closing basis rose to as high as 1,848.36 on Dec. 31 from 1,809.60 on Dec. 19.

• In the case of the Sell signal on Jan. 3, the index on a closing basis fell to as low as 1,826.77 on Jan. 6 from 1,831.98 on Jan. 2.

• In the case of the Buy signal on Jan. 10, the index on a closing basis rose to as high as 1,842.37 on Jan. 10 from 1,838.13 on Jan. 9.

I would like to say the ABC Indicator has never, ever in its history whipsawed between Buy and Sell signals the way it has recently, with three signals being generated during a period of four trading days. Alas, I cannot say it because the same thing happened on three occasions in 2013, as noted here:

• Aug. 7, Sell; Aug. 8, Buy; and Aug. 12, Sell.

• Oct. 11, Buy; Oct. 15, Sell; and Oct. 16, Buy.

• Nov. 7, Sell; Nov. 8, Buy; and Nov. 12, Sell.

Importantly, the ABC Indicator also flashed an S&P 500 Buy signal on Nov. 14, which is extraordinarily helpful in interpreting the subsequent short-term movement of the index in each of the three cases of comparatively high equity-market volatility last year.

Source: This chart is based on data at Yahoo! Finance.

Related Reading

The ABC Indicator of Movements in the S&P 500

ABC Indicator Flashes S&P 500 ‘Sell’ Signal: Jan. 3

ABC Indicator Flashes S&P 500 ‘Buy’ Signal: Jan. 10

ABC Indicator Flashes S&P 500 ‘Sell’ Signal: Jan. 14

Disclaimer: The opinions expressed herein by the author do not constitute an investment recommendation, and they are unsuitable for employment in the making of investment decisions. The opinions expressed herein address only certain aspects of potential investment in any securities and cannot substitute for comprehensive investment analysis. The opinions expressed herein are based on an incomplete set of information, illustrative in nature, and limited in scope. In addition, the opinions expressed herein reflect the author’s best judgment as of the date of publication, and they are subject to change without notice.

ABC Indicator Flashes S&P 500 ‘Sell’ Signal: Jan. 14

The ABC Indicator of movements in the S&P 500 (INDEXSP:.INX) introduced in a J.J.’s Risky Business blog post last month is flashing a Sell signal this Tuesday morning. In forecasting the short-term direction of the U.S. large-capitalization index on a closing basis since July 6, 2009, this indicator’s signals have been correct on 97 occasions, or 71.85 percent of the time, and incorrect on 38 occasions, or 28.15 percent of the time.

There have been important differences between the behaviors of the ABC Indicator’s Buy and Sell signals during the above-referenced period, as mentioned in a blog post this month. Its Buy signals have been right on 55 occasions, or 80.88 percent of the time, and wrong on 13 occasions, or 19.12 percent of the time, while its Sell signals have been right on 42 occasions, or 62.69 percent of the time, and wrong on 25 occasions, or 37.31 percent of the time.

Meanwhile, I am happy to note the first public test of the ABC Indicator in forecasting the short-term direction of the S&P 500 on a closing basis has continued to go well at J.J.’s Risky Business. This test will encompass 10 signals, and history suggests they will be right between six and eight times and wrong between two and four times. The initial three signals mentioned in the blog posts linked below were successful, as follows:

• In the case of the Buy signal on Dec. 20, the index on a closing basis rose to as high as 1,848.36 on Dec. 31 from 1,809.60 on Dec. 19.

• In the case of the Sell signal on Jan. 3, the index on a closing basis fell to as low as 1,826.77 on Jan. 6 from 1,831.98 on Jan. 2.

• In the case of the Buy signal on Jan. 10, the index on a closing basis rose to as high as 1,842.37 on Jan. 10 from 1,838.13 on Jan. 9.

The brief duration of this last ABC Indicator signal leads to the obvious question: What is the length of the so-called short term in this context? Historically, the indicator’s Buy signals have ranged between one trading day (eight cases) and 43 trading days (one case), with a median of 7.00 trading days, a mean of 9.71, and a standard deviation of 9.24, while its Sell signals have ranged between one trading day (10 cases) and 24 trading days (one case), with a median of 5.00 trading days, a mean of 7.04, and a standard deviation of 5.94.

Duration in Trading Days of ABC Indicator ‘Buy’ and ‘Sell’ Signals:

Median, Mean, and Standard Deviation

Related Reading

The ABC Indicator of Movements in the S&P 500

ABC Indicator Flashes S&P 500 ‘Sell’ Signal: Jan. 3

ABC Indicator Flashes S&P 500 ‘Buy’ Signal: Jan. 10

Disclaimer: The opinions expressed herein by the author do not constitute an investment recommendation, and they are unsuitable for employment in the making of investment decisions. The opinions expressed herein address only certain aspects of potential investment in any securities and cannot substitute for comprehensive investment analysis. The opinions expressed herein are based on an incomplete set of information, illustrative in nature, and limited in scope. In addition, the opinions expressed herein reflect the author’s best judgment as of the date of publication, and they are subject to change without notice.

ABC Indicator Flashes S&P 500 ‘Buy’ Signal: Jan. 10

The ABC Indicator of movements in the S&P 500 (INDEXSP:.INX) introduced in a J.J.’s Risky Business blog post last month is flashing a Buy signal this Friday morning. In forecasting the short-term direction of the U.S. large-capitalization index on a closing basis since July 6, 2009, this indicator’s signals have been correct on 96 occasions, or 71.64 percent of the time, and incorrect on 38 occasions, or 28.36 percent of the time.

There have been important differences between the behaviors of the ABC Indicator’s Buy and Sell signals during the above-referenced period, as mentioned in a blog post this month. Its Buy signals have been right on 54 occasions, or 80.60 percent of the time, and wrong on 13 occasions, or 19.40 percent of the time, while its Sell signals have been right on 42 occasions, or 62.69 percent of the time, and wrong on 25 occasions, or 37.31 percent of the time.

Meanwhile, I am happy to note the first public test of the ABC Indicator has continued to go well at J.J.’s Risky Business. The initial two signals mentioned in the blog posts linked below were successful. In the case of the Buy signal on Dec. 20, the S&P 500 on a closing basis rose to as high as 1,848.36 on Dec. 31 from 1,809.60 on Dec. 19. In the case of the Sell signal on Jan. 3, the index on a closing basis fell to as low as 1,826.77 on Jan. 6 from 1,831.98 on Jan. 2.

The ABC Indicator test will encompass 10 signals, and history suggests they will be right between six and eight times and wrong between two and four times.

Related Reading

The ABC Indicator of Movements in the S&P 500

ABC Indicator Flashes S&P 500 ‘Sell’ Signal: Jan. 3

Disclaimer: The opinions expressed herein by the author do not constitute an investment recommendation, and they are unsuitable for employment in the making of investment decisions. The opinions expressed herein address only certain aspects of potential investment in any securities and cannot substitute for comprehensive investment analysis. The opinions expressed herein are based on an incomplete set of information, illustrative in nature, and limited in scope. In addition, the opinions expressed herein reflect the author’s best judgment as of the date of publication, and they are subject to change without notice.

ABC Indicator Flashes S&P 500 ‘Sell’ Signal: Jan. 3

The ABC Indicator of movements in the S&P 500 (INDEXSP:.INX) introduced in a J.J.’s Risky Business blog post Dec. 20 is flashing a Sell signal this Friday morning. In forecasting the short-term direction of the U.S. large-capitalization index on a closing basis since July 6, 2009, this indicator’s signals have been correct on 95 occasions, or 71.43 percent of the time, and incorrect on 38 occasions, or 28.57 percent of the time (as indicated by Figure 1).

Figure 1: Percentages of Successful and Unsuccessful

ABC Indicator Signals Before Jan. 3, 2014

Source: This chart is based on J.J.’s Risky Business proprietary data.

However, there have been important differences between the behaviors of the ABC Indicator’s Buy and Sell signals during the above-referenced period, when the S&P 500 more than doubled on a closing basis to 1,848.36 on Dec. 31, 2013, from 896.42 on July 2, 2009, the last trading day before the inception of this incarnation of the indicator. Taking these differences into account has helped in my trading of derivatives of the index, including options on the SPDR S&P 500 ETF Trust (SPY), ProShares Ultra S&P500 ETF (SSO), and ProShares UltraShort S&P500 ETF (SDS).

Most significant, the ABC Indicator’s Buy signals have been right on 54 occasions, or 80.60 percent of the time, and wrong on 13 occasions, or 19.40 percent of the time (as indicated by Figure 2), while its Sell signals have been right on 41 occasions, or 62.12 percent of the time, and wrong on 25 occasions, or 37.88 percent of the time (as indicated by Figure 3).

Figure 2: Percentages of Successful and Unsuccessful

ABC Indicator ‘Buy’ Signals Before Jan. 3, 2014

Source: This chart is based on J.J.’s Risky Business proprietary data.

Figure 3: Percentages of Successful and Unsuccessful

ABC Indicator ‘Sell’ Signals Before Jan. 3, 2014

Source: This chart is based on J.J.’s Risky Business proprietary data.

Meanwhile, I am happy to note the first public test of the ABC Indicator has had a nice beginning at J.J.’s Risky Business: The Buy signal flashing the morning of Dec. 20 was successful as the S&P 500 on a closing basis rose to as high as 1,848.36 on Dec. 31 from 1,809.60 on Dec. 19. The test will encompass 10 signals, and history suggests the indicator will be right between six and eight times and wrong between two and four times.

Related Reading

The ABC Indicator of Movements in the S&P 500

Disclaimer: The opinions expressed herein by the author do not constitute an investment recommendation, and they are unsuitable for employment in the making of investment decisions. The opinions expressed herein address only certain aspects of potential investment in any securities and cannot substitute for comprehensive investment analysis. The opinions expressed herein are based on an incomplete set of information, illustrative in nature, and limited in scope. In addition, the opinions expressed herein reflect the author’s best judgment as of the date of publication, and they are subject to change without notice.